2010 Feb 4th

What’s the Newest Way for Hoboken Buyers to Save Money?

Buyer Rebates Become Legal in NJ

The New Jersey Legislature recently passed a law that will allow buyers to get part of the sales commision on the purchase of a home rebated back to them. Of course, the local agents are up in arms without even really knowing what this means or what affect it might have on their business. Why are people so afraid of change? What is really does is allow brokerage firms with a different (and innovative) business model to enter the local Hoboken real estate market.

Take a look at these companies and the way they do business:

Zip Realty link –ziplogo

Condo Domain link (warning – the site plays music) – condodomain

Redfin link –redfin

What this new law really means is that some or all of these companies are coming to Hoboken. In fact, right on the CondoDomain site, it says “coming to Hoboken” and a bunch of other places. They are all expanding and Redfin has raised over $30 million in venture capital.

I’ve also heard lots of agents saying look at Foxtons – they tried to cut commissions and failed. This is nothing like Foxtons. This new way of doing business recognizes consumers willingness and desire to search for homes on the internet. Have you not heard a traditional agent make the pitch in a listing presentation that 86% of buyers start their search on the internet so we are going to aggressively market your home for sale on line? Perhaps this added competition in the brokerage marketplace will be good for the consumer? These companies work with both buyers and sellers. I’d be very interested to hear what you all think about this.

Is a Rebate Taxable Income?

Local brokers have been exclaiming that buyers will have to pay taxes on the rebates making them far less attractive, yet the IRS has already ruled that rebates are NOT taxable income.

Posted by Lori Turoff | Currently 1 Comment »

2009 Dec 15th

Possible Good News for Hoboken Home Buyers and Sellers

Buyers Rebates May Become Legal in NJ

As reported by the New Jersey Association of Realtors:  At yesterday’s Senate Commerce Committee meeting, lawmakers approved bill A-373/S-139 sponsored by Assemblyman Patrick Diegnan (D-18) and Senator Nicholas Scutari (D-22).  The bill permits rebates to be provided to consumers in real estate transactions.  Only brokers could offer rebates to those buying property, not individual real estate licensees.   Rebates would have to be in the form of a credit or check and must be documented in a contract at the beginning of a brokerage relationship in a written or electronic form or in a buyer agency agreement.  The legislation pertains only to purchases of residential property.  The  bill will need to be considered by the full Senate before it reaches Governor Corzine for his approval.

Why is this important?  Our entire current commission structure is limited by the law that prohibits buyers from getting rebates.  There are real estate agencies   like Condo Domain , for example, operating in many other cities, who structure their commission relationship very differently.  They work as true “buyer’s agents” and are paid a flat fee rather than a percentage of the sales price.  The buyer’s agent never also represents the seller.    At this particular agency, there are two models to choose from – the full service option where you start your search on their website (which includes for sale by owners, etc.), their agent takes you out to see properties and handles everything up to the closing.  You would get a 20% refund of the buy side commission.  Or you could choose the “do it yourself” option where you would not have an agent to take you to see properties – you do that at open houses – but they work with you from offer to closing and you get back all but $5,500 of the buy side commission.  Wouldn’t that shake things up in the Hoboken real estate market!

Take a look at this video to see what I mean:
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Interestingly, I was approached to be an agent for this company in the Hoboken market.  The current state of the law in NJ, however, made it impossible.  Perhaps things are changing?

Posted by Lori Turoff | Currently No Comments »

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